Bringing Down the Cost of Health Care

In Houston, the tone for doing business is set by the oil companies. When it comes to their motivation and strategy for employee benefits that include wellness programs, fitness facilities, employee incentives, and in-house medical clinics, is it all about healthy employees and lower costs, or is it really about competitiveness in hiring and retaining the right talent?According to Steve Ginsburgh, Senior Vice-President of Human Resources and Workforce Development at Universal Weather & Aviation, “It’s not out of the goodness of everyone’s heart that we set these things up; it’s important to know the strategy from a talent perspective, then understand why you’re doing what you’re doing.”

No matter what the motivation for providing employee health care benefits, according to the Congressional Budget Office’s “2011 Long-Term Budget Outlook,” health care costs are likely to continue rising faster than spending per person on other goods and services for many years. Health care spending in the U.S. in 1960 was 4.8 percent of the GDP. In 2009, according to the CBO, $2.3 trillion was spent on health care, representing 16.5 percent of the GDP.

While some organizations have the resources to fund extensive wellness programs and keep up with the steadily increasing costs of health care, most do not. Tackling that issue for small to large businesses can be one of challenges, creativity and resourcefulness.

Incentives

The long term approach to controlling costs starts with a prevention strategy and getting and keeping employees out of harm’s way.

There is a great deal of debate on incentive programs to get employees to participate in health risk assessments and physicals, as well as overall wellness programs. A survey by HR consultant Watson Wyatt found that 52 percent of employers offer no incentive programs for employees to participate in wellness programs, and 47 percent do incentivize. Of the group that offers incentives:

Some, like Stephen Allen, feel incentive programs like the “Biggest Loser” are short lived. “Incentive programs like the “Biggest Loser” contest don’t work; I’ve seen people balloon up, then down, and that can’t be healthy,” stated Allen.

That’s where creativity kicks in, according to Veronica Edwards. “We’ve done programs like giving everybody a pedometer and having challenges between different departments to see which department can walk the most,” said Edwards. Edwards also believes productivity for the company improves when people take a break in their day, even if it’s just to walk. Another idea for employee involvement requires something most companies have: a break room, a big screen TV, and a Wii. “We have Wii tournaments during breaks, at lunch, and before and after work,” said Edwards.

Others believe leading by example and having a culture of healthy leaders sets the tone for the entire company. Michael Ringger commented: “It starts at the top with leadership by example. I try to show the benefits so people can see the results of taking time out of the day for some exercise.” Allen agrees that the leadership team should have participation objectives in community events like cancer walks and the MS 150. “We’re required to do it and glad to do it,” he said. Allen also has seen increased usage of the fitness room at Technip when the president of the company is on the treadmill. “When he’s there, there’s a huge crowd and not an open treadmill,” Allen said.

At the Houston Zoo, Sheri Lytle has seen the focus on keeping the animals healthy converted to employee health. “The employees are geared toward keeping the animals healthy with the right diet, and it does translate,” said Lytle. “We have a lot of active folks who are running in marathons.”

For Charlotte Wayland, the Spectra Energy program provides a clinic for emergencies and delivers wellness programs. “We have screenings for skin cancer,” she said, “and ‘Lunch and Runs’ for wellness, plus we have a fitness center in the basement that people can join at a discounted price, and we do flu shots in the fall.”

Ginsburgh added an additional idea to incentivize employees to use mailed generic drugs versus buying their prescriptions at pharmacies. “We had seven percent compliance on generics and mail. How do we move people to mail their generics? We developed a new scheme to give people 90 days free co-pay on their mailed generic drugs,” Ginsburgh shared.

Stephen Hamlin believes in a different approach for Taub Oil employees. He said, “We’ve changed our medical plan to a higher deductible.” After analyzing six years of data, Hamlin noted, “We have seen a steady decline in medical costs and the increased usage of generics because people have become much more engaged in their medical care.”

Ginsburgh prefers a straightforward approach, and excludes incentives like gift cards for taking a health risk assessment (HRA). With new employees, Ginsburgh’s approach is, “Want your benefits? Take an HRA.”

Education

The one point of agreement among all executives is the value of education in teaching employees about being healthier and the smart use of their benefits program to control costs.

“When it comes to dealingwithhigh blood pressure, cholesterol, diabetes or weight awareness,” said Edwards, “what we can catch, the earlier we catch it, the earlier we educate everyone, the better the outcome will be.”

Allen agreed. “I think the incentive is toward education,” he said, “and you feeling better and being healthier. I just want ongoing education showing the benefit to you, the employee.”

Even with free physicals included in benefit plans, some companies are seeing compliance at a disappointing 30 percent, and often free physicals are used more by dependents, rather than employees. “I think it has something to do with the choice of where you go – if you go to a doctor’s office, that’s one thing. I go to a clinic, and for a $25 co-pay, I’m getting an X-Ray, my blood tested, I get poked and prodded, and am on the treadmill, and I’m done. There is education in how to choose your doctor,” said Ginsburgh.

Lytle agrees that knowledge is key. “Educating employees on what to ask the doctor and pharmacist, and explaining the difference between a $50 co-pay as opposed to a $10 co-pay does make a difference.” At the Zoo, employees are schooled on the use and costs of an emergency room visit versus an urgent care clinic.

Lytle believes transparency is also part of the education process. “Employees look forward to seeing those numbers and want to know how we’re doing this quarter versus last quarter,” she said. Lytle has seen increases in participation in bio-metrics screenings, as well as annual exams, mammograms, and colonoscopies as a result of increased transparency.

Allen agreed. “You should be transparent,” he said. “Our top four issues are hypertension, high cholesterol, diabetes, and a new addition – depression. Those are the four top things we treat.”

Ginsburgh added, “We saw a bump in pregnancies nine months after the hurricane.”

Ringger, CFO at Woodway Financial, encouraged teaching employees to ask good questions before a cost is incurred. “Employees see charges come across that were never incurred, or should not have been incurred; as soon as they are challenged, they get removed. When you get good useful information you’ll have a better informed consumer,” stated Ringger.

Edwards believes the purpose of wellness is to identify the problem, be educated, and then take care of things early. At InGenesis, employees were waiting too long to see a doctor or get a procedure because they often could not afford to be without their paycheck. “We implemented a mandatory short and long-term disability insurance program dedicating $3.50 of each hourly wage to health and wellness,” said Edwards. “Now employees go get their procedure because their short-term disability insurance is going to kick in.”

Whose Responsibility Is Health Care?

Is health care the responsibility of employers? The issue of competitiveness comes up again.

“I have to be competitive in employee retention, and I think it’s our responsibility to provide employees with a way to have a healthy lifestyle,” said Technip’s Allen. “I also think it’s the employee’s responsibility to step up and use that in the proper way. That’s where I struggle and get more frustrated.”

Lytle agreed, and said she believes it’s the company’s responsibility to encourage people to be healthy while maintaining costs.

Ginsburgh believes companies have health care responsibilities by default. “This happened because of unions; it’s not out of the goodness of business’s hearts that we have the system as it exists today, and we have to be admitting of that.”

Frustration comes from the government passing the Affordable Care Act and not considering what businesses will have to do when it goes into full effect. “Nobody is trying to put everything together in an integrated fashion. A businesses responsibility is to stay in business,” Ginsburgh pointed out. Heads nodded in agreement.

2014 & Beyond

The enthusiasm for wellness programs, increased productivity, improving morale and cost containment took a quick turn as the conversation moved to the continuing rollout of the Affordable Care Act and the choices employers will make in 2014 about their health benefits programs.

“We’re now budgeting for 2014,” said Edwards. “Today, we’re making a bigger investment in wellness, but because we don’t know what to budget for in 2014, wellness may have to sacrifice for other areas of the business.”

Allen quickly added, “Thebig black cloud is approaching and approaching, and it could cost us a bundle of money that we’re just not prepared to pay.”

Because wellness programs under current insurance plans are intended to lower health care costs over time, there is deep concern about the new law. According to Allen, “The cost does not drop if you have fewer claims, so the new plan undermines that wellness program completely.”

Since most companies are working toward incentives to lower costs, will the new law have just the opposite effect?

“I think the problem is, from a 2,000 page health care bill we’ll probably get 100,000 pages of regulation,” declared Wayland. “When you add three million people to the system, and you already have a shortage of health care providers, people are going to struggle.”

For companies who are considering opting-out of their own insurance plans in 2014 in favor of paying a $2,000 per employee penalty, Edwards spoke for the group: “It concerns me when I hear big companies talk about exclusions and exceptions and opting-out. Who is going to bear the burden of carrying the costs for the rest of the country? Most people are working for small companies. If the big companies opt-out, small business can only bear so much, and remain competitive.” More nods.

Hamlin agrees 2014 is being looked at, and there is a lot of ground left to cover. “It is short sighted to think every company is automatically going to default and pay the penalty, and drop their premier benefits,” stated Hamlin.

Clearly, health care is changing, and the majority of the population doesn’t see how much it’s starting to change. “As entrepreneurs and business owners we need to do what we do best – find a better way,” declared Edwards.

The final word belonged to Mr. Ginsburgh. “Wouldn’t it be nice if we as businesses didn’t have to consider medical issues when we talk about our business strategy?”